Anglo American plans to reduce De Beers’ annual overhead by $100 million, CEO Duncan Wanblad (pictured) announced during a Dec. 8 presentation for investors.
The cuts are part of an overall $1.8 billion decrease in capital expenditures that Anglo plans across its various businesses. Anglo American owns 85% of De Beers; the government of Botswana owns the other 15%.
Going forward, De Beers’ capital expenditures will be reduced, with exploration focused on the highest-value opportunities in southern Africa, Wanblad said. The company is still committed to ramping up Venetia in South Africa and taking the Jwaneng mine underground in Botswana.
“Long-term fundamentals [for diamonds] are strong, and we have access to the world’s best diamond assets,” said Wanblad.
He said De Beers hopes to finally sign a new agreement with Botswana early next year and will continue to promote natural diamonds.
“The return of the iconic ‘A Diamond Is Forever’ campaign has proved highly successful,” Wanblad said. “We are committed to further strengthening demand for natural diamonds. The launch of our ‘origin story’ will differentiate our natural, traceable diamond offering, and highlight how the journey of our diamonds makes an extraordinary contribution to the producer countries.”
Wanblad said that while “De Beers operationally has also been solid this year,” it has faced “significant pressure downstream in this second half,” noting that it will post a loss in the latter part of the year.
“Demand and prices for diamonds have fallen as global GDP growth has fallen,” he said. “But all cycles end, and we believe that the current weakness is temporary. Indeed, we are working closely with our partners to ensure we can supply to that demand increase as it comes. Already, there are some signs that the market is beginning to turn.”
Earlier this week De Beers reorganized its executive committee, and it recently completed a strategic review.
(Photo courtesy of Anglo American)
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